Contractor or employee? The pros and cons of hiring the right kind of worker to grow your small business

It is a dilemma that faces every small business at one point or another – whether to hire more full or part time employees or to expand via a network of contractors.

Both approaches have their pros and cons, and it is a welcome problem to have – it shows that your business is beginning to grow beyond the means of just one or two people and become something bigger. The question remains though – what is the best way to recruit the right kind of worker to grow your small business? It can be a hugely complex question, with answers that differ from business to business, but we thought we would give you a few pointers to think about that might help you to decide the best course of action for your own company.

Have you clearly defined your vision and goals for the business?

This is an absolutely crucial starting point, for many different reasons that go far beyond recruitment. As the founder of a small business the chances are you have probably got your own ideas of where you want the business to go one day. But as your business grows, we think that it is absolutely essential that you begin to firm up those ideas to begin to define an overall vision for the business. This is crucial because it is a very public way for your new colleagues to feel that they are able to contribute to this dream for the business, giving them a purpose to everything they do in their roles.

But it is also important because it will help you with your recruitment decisions. The strategy you should have developed as a part of your plan to achieve the vision will require certain kinds of people in certain roles, and hopefully the process of looking at this overall journey should give you some indication of whether they need to be an employee or a temporary contractor.

Is the area that you need to recruit in critical to achieving your overall vision? If so, you might want recruit people as fully-fledged employees who are likely to be inspired by that vision – and who will want to commit completely to trying to help you achieve it.

How important is it to you to have control over how the work is done?

There are a countless variety of tasks that need to be done in every business. But one of the key considerations for anyone trying to decide whether to hire a contractor or employ a new team member is the degree of control they feel they need to have over the work being done.

By this, we don’t mean achieving the task – obviously, everyone wants the task to be completed – but instead this is about focusing on the differing relationship between employers and employees, and employers and contractors.

So, for example, while you can still clearly define what you want a contractor to actually produce for you, they often have far more freedom to do the job in their own way. An employee is more constrained however, by the strict definition of the job that they are contractually employed to do for you.

With this in mind, it is well worth thinking hard about how important that control is to you – does this particular task just need to be done, or are you keen for it to be done in a very particular way?

Does your business need people to be there for the whole journey?

This goes right back to our initial point about the importance of defining a vision for your business as it grows. At any stage in that growing process, it is a case of looking at the business and deciding at what point you need to have people involved who are there for the long haul.

These will be the people who can buy into your long term vision, who will bring loyalty, passion and new ideas to your business. And of course, these kinds of people are hugely valuable – in the right roles, and at the right time.

So, be very careful about assessing exactly what it is that your company needs at any given moment. Does it need the loyalty and long term commitment that full employees will bring in? Or, right now, does it need the flexibility and agility that you can get from having a lightweight team of contractors who can be engaged on specific tasks as and when they are needed?

Knowing the answer to these questions really only comes from paying close attention to the way your company is expanding, and having a very clear idea of what your growing customer base needs most at any given moment.